Misuse of Key Objectives (OKR)

Since its invention by Intel At the end of the 70s, the objectives and key results (OKR) have become popular in the market by the managers of the organizations.

Certainly Google, Amazon, Dropbox and other big tech companies credit them for much of their success. John Doerr's book Measure «Measurements that Matter» drives this trend further. Many organizations are implementing or have already implemented OKR.

But you have to be aware of the risks they can generate: OKRs are just target containers, so they serve bad targets just as well as good ones. In fact, of all the management tools, OKRs are the easiest to misuse and abuse. It's easy to fall into that trap. This is a relevant issue because an incorrect OKR can amplify the problems the organization is dealing with instead of solving them.

Common mistakes when raising an OKR

Using an OKR for a Plan (production targets)

This is the most common mistake and one that can quickly reveal itself in an organization: the natural inclination is to use an OKR to express an action or production plan.

For example:

O (Objectives): Become a leader in the company

1. KR (Key Results): Mobile app v2.2 released
2. KR (Key Results): Integrate with SalesForce
3. KR (Key Results): Switch to a new fetch stream
4. KR (Key Results): Run 10 paid campaigns

What is the common misconception: Objectives and key results are designed to convey goals: what we are trying to achieve, when and how we will measure success. Creating, launching, and promoting features and products are not the goals. The objectives are the benefits that we hope to obtain from these actions..

Goals that communicate a plan (known as production goals) make this basic logical error:

We want to achieve X (the real goal)
The best way to achieve X is to do Y (a solution)
Therefore, doing Y is equivalent to achieving X.

In the following technology-based example, steps 2 and 3 often represent big "leaps of faith":

Doing Y will in fact achieve X
Y is the best way to achieve X
And it will not have big negative side effects
And it's doable with our current technology and resources.
And it won't cost x2-x4 more than we think
And so on

Many projects raising their OKRs are invalidated by some or all of these assumptions, especially the first example, the assumption that the project will have the intended effect. We may release v2.2 of the mobile app and users will hate it and usage will plummet. The new capture flow may not result in a measurable change in user behavior. Running 10 campaigns can help us acquire the right kind of wrong users etc. These realities usually occur in most cases in the engoque to products.

Doing things is not the goal. The goal should be to achieve things.

The correct sequence should be:

1.- Define what you want to achieve in the form of objectives and key results

2.- Plan the actions to achieve the result

If you keep creating output goals instead of results, the trick to getting to the real outcome or impact goal behind them is very simple: just ask "why?" For example:

KR (Key Results): Release v2.2 of the mobile application → why? → Increase mobile WAU by more than 300K
KR (Key Results): Integrate with SalesForce → why? → Reduce churn to less than 2,5% / month
KR (Key Results): Switch to a new onboarding flow → why? → Reduce the average registration time to less than 2 hours
KR (Key Results): Run 10 paid campaigns → why? → Acquire 2500 leads per month

Using a non-SMART OKR

The management guru Peter Drucker, defined SMART goals in the 1950s, but they are still valid today. The objectives should be:

• Specifics (Specific): offers a clear image of the desired final result; unambiguous.
• measurable (measurable): all key results must have clear metrics.
• Ambitious (Ambitious): taking the team out of their comfort zone (Google founder Larry Page calls this feeling "uncomfortably excited").
• Realistic (Realistic): achievable, not pure fantasy.
• Limited in time (time-bound): each OKR must have a clear ETA (Estimated Time of Arrival – Estimated Date of Arrival), usually the end of the quarter or the end of the year.

Some of the main challenges that arise when defining an OKR that qualify it as non-SMART are:

• High-level key results and content gaps: MBA language doesn't work here: "deliver engaging experiences" or "drive customer satisfaction" are not specific or measurable.
• Unrealistic key results: Some managers believe that their job is to ask for very high goals as a way to push people to give more. This tactic always backfires: people will seemingly commit, but quietly reject a goal they perceive as unfeasible. It is much better for the people who do the work to help find what is ambitious but realistic.

OKRs are not a zero sum game, are intended to foster collaboration, not lasting negotiation.

Excessive OKRs

Companies and teams often get excited about OKRs and put everything imaginable into them. Teams of 4 people try to commit to 6 sets of OKRs, each with 4-5 key results. Managers expect to see all possible metrics captured in OKRs and request weekly progress checks.

As a consequence, unrealistic objectives are included, but others derived from having so many objective and result metrics can be even worse:

• No focus: Having too many goals takes focus away from teams. When everything is important, it is very difficult to know what to work on and as a consequence there is less progress.
• Low completion rate: Even if the team did very well, only a small percentage of goals were completed at the end of the cycle. This can lead to disappointment, distrust in the process, treating OKRs as wish lists, or rejecting OKRs outright.
• Too Much Process: OKRs are a tool for capturing and communicating goals. They are not meant to serve as dashboards and weekly monitoring is too frequent. There are better tools for that kind of review of the numbers in short periods of time.

When it comes to goals, less is more.

One way to get out of this vicious cycle of constantly creating new OKRs is to score those OKRs at the end of the cycle and see what percentage is complete. This helps gauge whether you are trying to do too much or too little. You can calculate the completion rate for each of the key results (this should be easy, because they are measurable if defined correctly) and then average all the OKRs.

What is a good completion rate? On Google, 70% is considered normal, indicating a correct ratio of ambition and realism. For many companies, that's too lenient—they set a higher goal. However, 100% completion rate is as bad as 50%, which means that people are not ambitious enough, they are just looking for safe goals.

A good approach when first defining an OKR is to start small and strive to include only the most important things. At a team level, you can start with 3x3 (3 objectives each with a maximum of 2 key results) and over time try to see it down to 2x6. At the organizational level, you should try to stay within 5xXNUMX OKRs. Smaller companies can often do this with fewer top-tier OKRs.

OKRs defined from the top down

The problem appears when the goals are created by the "planners" and transmitted to the "implementers". So they are usually bad goals.

They lack the perspective, knowledge, and insight of the person doing the work. These people can contribute not only to your goals, but also to those of their superiors: missed goals, unrealistic or overly cautious goals, better ways of measuring, etc. Those goals are also less likely to gain acceptance. If we do not reach the objectives, it will always be the fault of the plan.

1. Managers create OKRs for employees
2. Product managers create OKRs for the team
3. The finance team defines the expected results for all

The best people to help define goals are the ones who will make them happen.

If you want people to participate in defining their own goals, you have to count on them. In a development team, the potential profiles (project manager, developers, user experience experts,…) must create the draft and then share it with the team for review. Similarly, managers should create schematic OKRs and ask them to start filling in "the gaps" and come up with missing objectives and key results. The process must be both bottom-up and top-down.

Using OKR for performance evaluation

Some managers think of OKRs as a way to get people to commit more, work harder, and be more accountable. A smart way to increase performance, productivity and production. Some even try to tie performance appraisal, compensation, and promotion to OKRs.

This is the worst way to think about OKRs.

It is true that good goals can help individuals and teams to push themselves and achieve more, but it is never due to a reward or pressure. The improvement comes from the clarity, focus, coherence and sense of impact that the lens brings.

Linking performance appraisal to OKRs is a major deterrent and cause of demotivation. It makes it easy for people to game the system: push for unambitious goals, results with little continuity, estimates of explosive effort. It definitely gets anyone to be ambitious with their goals.

OKRs are not contracts between managers and employees.

If anything, OKRs are a tool for getting managers to perform better: clearly and transparently communicating what they want to achieve and how they'd like to measure success.

It is key to be more collaborative in defining goals and more aware of what is possible; remain constant and do not make sudden changes in objectives without clarification. Once everyone is involved in creating OKRs, these benefits ripple throughout the organization.

We can all become better stewards of ourselves, our teams, and our organizations.